Traditionally, small business owners had to navigate the hassle of physically making loan repayments, often resulting in financial strain. However, with the rise of merchant cash advances (MCAs), an alternative repayment method has gained popularity - repayment through a percentage of future card payments. In this blog post, we will explore the advantages of this payment structure, how it works, and why it can be beneficial for small business owners seeking financial flexibility.
With a card payment loan, the money is paid back automatically through a percentage of your future card sales.
In a card-based repayment model, the repayment process seamlessly integrates with your business's daily card transactions. Instead of making fixed monthly payments, the lender deducts a predetermined percentage of your future card sales to repay the merchant cash advance. This means that your repayment amount fluctuates based on your business's performance, allowing for more flexibility during periods of slower sales and greater repayment during peak seasons.
A merchant cash advance is a flexible, alternative type of funding.
Cash Flow Flexibility
One of the most significant advantages of card-based repayment is its flexibility. Since the repayment relates to your card sales, you won't face the burden of fixed monthly payments. During slower periods, when your card sales are lower, the repayment amount will adjust accordingly, reducing the strain on your cash flow. This safety net ensures you can comfortably manage your business's financial obligations without disrupting operations.
If you're not sure where your cash flow will stand month-on-month, an MCA is a sensible option.
Aligning Repayment with Revenue
With card-based repayment, your loan repayments are directly linked to your revenue stream. As your business grows and generates more card sales, the repayment amount increases, allowing you to pay off the advance faster. This alignment ensures that the repayment process is proportional to your business's performance, creating a balanced and sustainable approach.
Simplified Process
Card-based repayment simplifies the repayment process for small business owners. There is no need to remember due dates, write checks, or worry about missed payments. The repayment is automated and seamlessly integrated into your card processing system, streamlining your financial management and reducing administrative burden.
One of the main benefits of this type of loan is the ease of use and repayment - saving you time and effort.
Reduced Risk
In comparison to fixed monthly payments, card-based repayment reduces the risk of default. Since the repayment amount adjusts with your sales, there is less likelihood of being overwhelmed by unaffordable monthly obligations. This flexibility provides a safety net during challenging periods and allows you to navigate temporary cash flow constraints with ease.
When opting for card-based repayment, it's essential to work with MCA lenders who specialise in this payment structure. They will set up a repayment system that integrates with your card processing provider, ensuring smooth and accurate deductions. Make sure you understand the rates and terms, and even though you only repay when you make a sale - you still should be confident that you can repay the funds.
If you're looking for a merchant cash advance, an experienced lender is important - like Love Finance.
Love Finance offer merchant cash advances with competitive rates and flexible repayment terms. If you think you could benefit from a card payment loan, and you take over £2000 a month in card sales, enquire with us today. Our account managers are knowledgeable about how all our loan products work - so if you have any further queries, don't hesitate to get in touch or visit our blog.
As with any financing option, it's essential to monitor your card-based repayment structure regularly. Keep a close eye on your card sales, repayment amounts, and overall cash flow. This will enable you to assess the impact of the repayment structure on your business and make adjustments if necessary.
Maintain open communication with us to address any concerns or discuss potential modifications to the repayment terms.
The option of card-based repayment for merchant cash advances offers small business owners a flexible and convenient way to manage their repayment obligations. By linking repayment to future card sales, this method aligns your financial commitments with your revenue stream, ensuring that repayment remains proportional to your business's performance. With improved cash flow flexibility, simplified processes, reduced risk, and the ability to adjust repayment amounts, you can focus on growing without the burden of fixed monthly payments. Embrace the benefits of card-based repayment and experience a more streamlined and adaptable approach to repaying your merchant cash advance.
